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Notes from the Trading Desk – Europe

As we head into August, risk assets face a series of headwinds. Equity market performance has been strong of late, and many investors may feel it’s time to take some profits.

Notes from the Trading Desk – Europe

it is clear to us that the Fed and the ECB are nearing the end of their hiking cycles. However, the market still appears to be split on a what September may bring, as data could push the decision either way. All eyes will be on the Bank of England (BoE) this week.

Notes from the Trading Desk – Europe

The Federal Reserve, European Central Bank and Bank of Japan hold their respective policy meetings this week. The market anticipates the Fed and ECB will hike rates 25 basis points.

Notes from the Trading Desk – Europe

This week US earnings season starts, with several banks reporting. Focus will be on loan default data, given the rising cost of debt. Recent data shows filings for bankruptcies rising, so something to keep an eye on.

Notes from the Trading Desk – Europe

Last week, global equities retreated from recent highs. The European Central Bank’s global banking forum, the US Fed’s annual banking stress test, European Union CPI releases, China PMI and Japan CPI and Industrial Production reports could be key catalysts this week for the markets.

Notes from the Trading Desk – Europe

Global equities entered bull market territory last week. Investors took the weaker inflation data and the first Fed pause in a year as a positive, looking past Fed commentary about future rate hikes. Chinese stimulus hopes also helped to buoy global investor sentiment last week, with rhetoric suggesting further measures will be taken to boost China’s economy.

Notes from the Trading Desk – Europe

Focus shifts quite firmly this week to some key central bank policy decisions. On Wednesday, the Federal Reserve holds its policy meeting. on Thursday, the European Central Bank meets, and on Friday, we have the Bank of Japan rate decision.

Notes from the Trading Desk – Europe

Inflation appears to be continuing to cool in the eurozone. Whilst some European Central Bank (ECB) officials welcomed it, they did continue to push the hawkish messaging last week. Comments suggest officials are still committed to a June hike, and there remains a strong possibility of a hike in July too, as they continue to fight inflation.

Notes from the Trading Desk – Europe

The clock continues to count down to the US Federal government’s debt default deadline.

Notes from the Trading Desk – Europe

The US debt ceiling deadline looms, and bipartisan talks failed to yield much progress. The two sides remain far apart in terms of resolving the potential crisis. Treasury Secretary Janet Yellen has warned the federal government could default as soon as 1 June, and that this could undermine the US and global economy.

Notes from the Trading Desk – Europe

There is plenty to focus on this week, with some key macro data coming out (US CPI), the US debt ceiling in focus (Biden-Congress talks), and the Bank of England decision (Thursday). In addition, the concerns around the US regional banks will no doubt remain a driver for markets.

Notes from the Trading Desk – Europe

Corporate earnings will continue to dominate this week, with tech heavyweights a focus in the United States. Microsoft. A large number of European and Asian companies also report earnings this week.